What Should I Do If I Owe the IRS Money for Back Taxes?

Notepad with sign Owe Taxes
If you have unfiled returns the first step would be to file those returns because you have to be in full compliance before you are eligible for an installment agreement. Then I would determine if you were assessed any penalties and if so I would try to get the penalties abated.

If you owe less than $50,000 you can get up to a 6 year installment agreement over the phone by providing limited financial information. However you must agree to make monthly direct debit payments from your bank account.

If you owe more than $50,000 you can still get an installment agreement but you have to file a 433-A financial statement and provide bank statements and mortgage and student loan payoff information.

The IRS uses that 433-A information which contains your income, assets and secured liabilities to determine your ability to pay the tax. However the IRS only considers secured liabilities like primary residence mortgages and student loans and monthly living expenses like food, utilities, health insurance transportation costs and court ordered payments like child support. The IRS has 10 years to collect the tax from the later of the due date of the return or the actual date filed.

If you file a separate business return (other than a 1040) like an 1120S or 1120 then you would also complete a 433-B based on that returns expenses.

If you do not have the ability to pay the tax within the 10 year collection statute you can consider filing an offer in compromise but the IRS also considers your health, age and future earning ability in addition to your assets and liabilities.

Once you get on an installment agreement, I can help you get the bank levy’s or wage garnishments released. Feel free to call Gregory Spadea at 610-521-0604 if you need help with back taxes.

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